Vital Tips for First-Time Credit Card Users

Deepak Kumar
Co-Founder at SoulWallet
25 May 2021

3.5 mins read

Credit cards can be outstanding tools to better your financial health. Not only can they extend you valuable credit to purchase necessary goods or services, but they can provide attractive rewards that can be used for meals and vacations.

 

That said, for first-time credit card users, credit cards can be intimidating. It’s easy to hear horror stories about how they’ve destroyed an individual’s financial livelihood or have led to massive interest charges that are essentially inescapable.

 

Because of this, it’s worth your time to learn some first principles and key tips so that you can safely use a credit card. By following this advice, you can get the most out of your credit card and safeguard your financial health—whether you are a first-time credit card user in the UAE or anywhere else.

 

Some Key Tips and Strategies on Safe Credit Card Use

Before looking at any type of credit card, it is critical to ensure that you have a steady income. While credit cards can be immensely rewarding, you can only obtain those immense rewards if you can pay off your balance.

 

Without a steady income, it becomes difficult to pay off that credit card balance. The longer that you don’t pay off your balance, the more that you will be paying in the long run. Even if you are just making minimum payments, hefty interest expenses can be extremely costly. Double-digit interest rates can quickly add up. Therefore, before signing up, make sure that you will have a consistent enough income to pay off your monthly statements. By doing so, you will avoid a very ugly financial situation.

 

Next, you want to make sure you are signing up for the right credit card. As similar as credit cards may seem, they offer different terms and rewards. You will certainly want to review your potential interest rate and any penalties that will come from late payments. Beyond the negative aspects, however, you will want to take a close look at your unique spend and your targeted credit card’s rewards.

 

Rewards are some of the best parts of using a credit card. All credit cards offer points that you can then exchange for rewards, but credit cards offer different exchange rates for certain things. For instance, one credit card may offer slightly more points for restaurant and dining spending and another may offer slightly more points for booking flights. You’ll want to read the fine print and sign up for a card that gives you more points for your lifestyle.

 

Another key tip is to avoid getting too close to your credit limit. Every credit card user has something called a credit utilization ratio. This is essentially the percentage of outstanding credit that is available to you.

 

There is a fine line here. The basic rule is the lower your credit utilization ratio, the better. A high credit utilization ratio can harm your credit score. However, that shouldn’t stop you from responsibility using your credit card. You should follow your best judgment here and find a credit utilization ratio that meets your needs and does not harm your credit score.

 

Finally, be patient. While it can be tremendously exciting getting a new credit card, you don’t necessarily want to jump at the first opportunity. Make sure that you are looking at several different types of credit cards. At the very least, you should do some Internet research on those specific cards to see if one suits you over another. Also, don’t hesitate to call the specific bank to find answers to any questions you may have. By being patient and completing your due diligence, you can make this experience much easier. 

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